International Real Estate, STAFF NEWS & ANALYSIS
US Suburbs as Poverty Traps: So the American Dream Fizzles
By Staff News & Analysis - January 08, 2015

The Atlantic Suburbs and the New American Poverty … More people with low incomes now live outside of cities, and some areas are ill-equipped to deal with the influx of the poor … Between 2000 and 2011, Atlanta's suburban poor population grew by 159 percent. But the suburbs of Atlanta no longer hold just the promise of good schools, clean streets, and whitewashed homes with manicured lawns proudly displaying American flags. They are increasingly home to the very poor, who find themselves stranded in suburbs without the kind of transit or assistance that they might once have found in cities' urban cores. – The Atlantic

Dominant Social Theme: The suburbs need to be spruced up. It will happen.

Free-Market Analysis: Nowhere is the foundering of the American Dream more evident than in many US suburbs. Suburbs used to lie at the confident beating heart of the American Experience. Now they are prostrate baggage of an ill-conceived social experiment.

Suburbs, initially called ex-urbs in the hopeful 1950s, were built out of zoning regulations among other things. People were supposed to live in one place and work in another. The car was the glue that would hold it all together.

But what if you've lost your job and even commuting has become an expensive privilege you can't afford every day? What if you can't even get to where the jobs are to find one or hold one?

It never occurred to the US's overconfident social planners that suburbs, too, would one day be gripped by inner-city poverty and that their promise would evolve into a kind of gilded trap.

Here's more:

Fully 88 percent of Atlanta's poor live in the suburbs, according to Confronting Suburban Poverty in America, by Elizabeth Kneebone and Alan Berube of the Brookings Institution. Between 2000 and 2011, Atlanta's suburban poor population grew by 159 percent, while the city's poor population remained essentially flat. It's not just Atlanta—across much of the country, poverty is increasingly a problem found in the suburbs.

The number of poor in the suburbs surpassed the number of poor in the cities in the 2000s, and by 2011, almost 16.4 million suburban residents lived below the poverty line, according to Kneebone and Berube.

The fact that more poor people live in the suburbs doesn't have to be a bad thing, Kneebone told me. If low-income residents have access to good job opportunities, affordable housing, low crime rates, and good schools, then the suburbs can provide a path out of poverty.

But poverty has increased so quickly in some suburbs that these areas are ill-equipped to deal with it, she said. "Many of these communities lack the infrastructure, safety-net supports, and resources to address the needs of a growing poor population, which can make it that much harder for poor residents to connect to the kinds of opportunities that can help them get out of poverty in the long run," she said.

The problem speaks to a different kind of erosion of the American Dream, in which families strive to get to the much-vaunted suburbs, only to find out there's nothing for them there. And as suburbs see more and more poverty, they become the same traps that impoverished, urban neighborhoods once were, where someone born there has few chances to improve his economic standing.

There are more tangible problems that arise when poverty grows in the suburbs. Often, government structures change more slowly than the population at large, and residents find themselves represented—and policed—by people who don't understand their needs or concerns.

The unrest in Ferguson, a St. Louis suburb, over the past year, reflects this conflict. Suburbs also have less transit than urban areas, making it difficult for low-income residents to get to jobs or buy groceries. And social services have been slow to follow the poor to the suburbs, so many suburban poor find themselves isolated and without a safety net, hidden from those who might be able to help.

The last paragraph links the unrest in Ferguson to larger issues of suburban poverty. Is this so? Nope. The meme this article is presenting is one of US poverty based on stagnation of wages occurring as a result of the endless 2008 recession.

But like Keynes's General Theory itself, the process of poverty is never examined in this lengthy article. And yet it can be analyzed easily.

The current problem of poverty in the US is directly linked to at least four things:

  1. Central bank monopoly monetary stimulation that created the boom-and-bust of 2008 and the horrendous 2009 decline of the stock market.
  2. A relentless tax structure that penalizes entrepreneurial activity and reduces "animal spirits."
  3. Leviathan itself, which has regulated what is left of the US economy into a bizarre shadow of itself.
  4. A series of judicial decisions that have emplaced corporate personhood and thus created stupendous multinational corporations that are hardly any less powerful or unwieldy than fedgov itself.

US diminishment is linked to the economic system that the country runs under. It is a system no less oppressive or un-free than the one installed in Europe. And over time, any economy would succumb.

The article suggests that the most practical thing that can be done for foundering US suburbs is to install better mass transit so newly suburban poor can regain the mobility they need to find and keep employment.

The article tells us, "Of course transportation isn't the only solution to suburban poverty. But it's a start." Actually, it's not much of a start. The mercantilist structure of the US – of the West generally – is in full bloom now. There is no going back; empires in decline rarely reverse course.

Here at The Daily Bell, we preach various sorts of asset protection structures. Those who are comfortable with the direction in which the US is traveling may not want to make adjustments, but others will surely seek offshore residences, second passports, physical holdings of gold and silver and partake of other strategies that make their portfolios and families more secure.

The unraveling of US suburbs is predictable given the mercantilist system that is regnant throughout the West. It is a system that emphasizes bigness, waste and inefficiency. It is one that makes entrepreneurship difficult and access to capital problematic.

If things do get "better," thanks to a continually rising stock market, eventually the system will lapse into worse shape once this latest asset bubble has thoroughly expanded and collapsed.

After Thoughts

All that is going on today is predictable. Poverty abides and expands. But you can take "human action" to ensure that their your own prosperity does not diminish similarly. Now is a good time to do so.

Posted in International Real Estate, STAFF NEWS & ANALYSIS
  • Dimitri Ledkovsky

    The “free video report” that scrolls across the bottom of the screen is annoying.

  • Dimitri Ledkovsky

    HBO made a documentary on a related subject called “American Winter”. It’s meme seemed to be: we’re from the government and we’re here to help. See trailer for this on youtube: https://www.youtube.com/watch?v=NbxQpCq21l0.

  • kentclizbe

    While you’re pointing in the right direction (the Elite Vanguard who know better than us proles what’s good for us), you’ve identified the wrong policies that have created “poverty in the suburbs.”

    The suburbs were originally the solution to the problem of hard-working achievers being stuck with the criminal and unproductive societal dregs in the inner city.
    Suburbs would have been perpetual motion machines, always improving, always getting better, if not for the Elite Vanguard’s improvement schemes.
    The reason for poverty in the suburbs has nothing to do with Keynes or central banks.
    The reason for poverty in the suburbs is CENTRAL PLANNERS. This cadre of the Elite Vanguard decided that the solution to inner city squalor was simple–take the squalid residents and move them to the suburbs!
    This policy, known as “mixed income housing” among other code words, imposed requirements on suburban developers. These included the requirement to provide housing for low-income residents.
    Moving project dwellers to the suburbs did not imbue them with suburban values. It simply transferred poverty to the suburbs.
    Get a bit deeper in your research. Look at why there are poor people in the suburbs. How did they get there originally? The entire Brookings nonsensical analysis collapses in light of the mixed-income housing requirements imposed in the last 50 years. We’re just seeing the results now–it took 50 years, but here we are.
    Good insight here:

    http://www.chapa.org/about-chapa/chapa-publications/mixed-income-housing-suburbs-lessons-massachusetts

    “Mixed-income housing as a federal, state and local housing policy has gained much support in recent years and has been promoted in many forms from HOPE VI to inclusionary zoning. Early advocates recommended it as a way to avoid or reduce concentrated poverty in subsidized housing and, to the extent that it was most likely to be sited in non-poverty areas, as a way to give low-income families access to safer neighborhoods, better schools, and more employment opportunities. They also saw it as a way to reduce subsidy costs (by shifting some costs to market units) and to promote better design and management (to attract and retain market rate tenants). Since the tax reforms of 1986, it has also been seen as a way to bring “market discipline” to project planning and financing. Proponents also cite its potential to reduce opposition to affordable housing in low-poverty areas and suburban communities, as local officials and residents appear to prefer it as a social and fiscal model”

    • We have personally observed the growing poverty of suburbs, especially in the Northeastern USA. It has to do with six years of joblessness and the inability of the state to care for roads, sidewalks, etc. This is a phenomenon entirely separate from “exporting the dregs” of society …

      • kentclizbe

        DB,
        Local governments are responsible for sidewalks and roads.
        The suburban model–productive citizens creating new communities–decentralized (out of the urban center) housing and support services created stable tax bases. As long as the suburbs were allowed to develop by market forces (only those who could afford to live there lived there, and those who lost their jobs also lost their houses and thus were forced out of the suburbs) there were literally NO POOR people in suburbs.
        Where/how did the poor people get in the suburbs?
        They were, in effect “bussed” in by the central planning “mixed income” concept. Once in the suburbs, poverty took root.
        Suburban developments, like those you’re describing witnessing decaying, were forced to accept poor people (“affordable housing”) in return for approval to construct the market-based housing. The planners imposed ratios of full price to affordable units in the suburbs.
        Like a virus, poverty spread. Poor people cannot pay taxes for services. Brought out to the suburbs, their dysfuntions. The idea that putting them in close proximity to productive people would make them productive was debunked. The idea that putting their kids in good schools would improve them (absent a change in lifestyle) was debunked. Instead the result has been steadily deteriorating suburban tax bases, and therefore infrastructure.
        Look into the unnatural, central planning that brought poverty to the suburbs.

        • Laird

          Kent and DB are both correct, but you’re addressing somewhat different things. DB is correct that central banking and Keynesian economic theory are the root cause of the decline (and pending collapse) of our economy, but that’s not the direct cause of increased poverty in the suburbs. Kent has correctly identified the cause of that. As was noted in the quoted article, inner city poverty has remained flat (they cited Atlanta, but that city is certainly not unique in this respect), but it is only because of the “exportation” of the poor to the suburbs, as Kent explained.

        • Hey You

          My view is more like KentClize’s view in that collectivist politics brought proverty to the suburbs (and also to a lot of other places). It seems that when political ideas are proven to not work, the cry is to implement more of failed ideas. The logic is similar to, “go faster, to get to a gas station before we run out of gasoline”.

  • Danny B

    There are 2 sources of wealth to improve one’s condition. The minor one is wealth from the earth.. Hunter-gatherers and farmers have little excess wealth. They have a moderately low standard of living because our standard of living is improved by manufactured goods. Cities were built because manufacturers needed a concentrated labor pool. Cities had the greatest concentration of jobs and manufactured goods. It was easier to support non-producers in the city than in rural areas. As manufacturing jobs decline, the less concentrated areas will feel it first. It takes much more energy to live in the suburbs. The farther one is from manufacturing centers, the less wealth is available. Our manufacturing centers moved to China and that is a long ways away.

    Push will come to shove before too long;
    “#16 69 percent of the federal budget is spent either on entitlements or on welfare programs.

    #17 The number of Americans receiving benefits from the federal

    government each month exceeds the number of full-time workers in the
    private sector by more than 60 million.”
    http://theeconomiccollapseblog.com/archives/17-facts-to-show-to-anyone-that-believes-that-the-u-s-economy-is-just-fine
    The 2 major gangs in los Angeles are the Bloods and the Crips. Not liking all that violence many bloods and Crips moved out to areas like Lake Los Angeles and Lancaster. Before long, these areas had a murder rate as high as South-Central Los Angeles.

    BANANA zoning to get everybody into cars made the problem worse.

    (Build absolutely nothing anyway near anything)

  • Jim Johnson

    We are made of tough stuff. I, for one, was not looking much forward to the long slide into the gentle night. This will be stuff for the history books, and running to the other side of the World is not the way I choose to face it. We will soon join the rest of our neighbors in learning what a tough slog living can be. My bet is we do as before: amaze ourselves. We are adjusting to incredible upheavals in existence. Imagine Space as holding the jobs of the future, where we can not create enough babies to fill all the work opportunities. Where vacation will simply be a return to Home- to go skiing or swimming or simply walking about. Much of our BooHoo has to do with existence inside a closed system, taking orders from those who rose to the top of The Pile (and fight tooth and nail to stay there). Screw that. Give me my neighbors, my American neighbors, and stay out of the way. You know, that Liberty thing.

    • Hey You

      Some of us are and some of us are not made of tough stuff. The problem seems to be that those who are not, support collectivist trends that engender political solutions. The path sooner or later becomes an expressway as independence falls victim to “the greatest good for the greatest number”. That concept was the cause of our society’s peaking and the downhill result is implementing the transfer of our benefits to other societies which are able to meet challenges that our society now ignores.

      • Bill Ross

        “Some of us are and some of us are not made of tough stuff.”

        BS. The “fixed nature, men are from Mars, women from Venus, never the twain shall meet myth.”

        Complete and utter CRAP:

        http://www.nazisociopaths.org/modules/article/view.article.php/36

        We can CHOOSE to be and do, as we please. No one can stop our actions. They can only react after the fact. We are already free, so long as we have the cohones to stare down and defy those who would enslave us.

      • Jim Johnson

        I have been pleasantly surprised and bitterly disappointed in matters of Character. Good thing the pleasantries far outweigh the disappointments. Studies are showing the present generations are eagerly grasping notions of Liberty, scoffing at what even I had accepted as concessions because some judge insisted we do so. ‘No’ and ‘shall not’ read exactly as written.

  • Danny B

    I did a google search on “income inequality”… 4.1 million.
    I did a google search on “intelligence inequality”….1670
    “How have modern democracies squared their commitment to equality with
    their fear that disparities in talent and intelligence might be natural,
    persistent, and consequential? In this wide-ranging account of American
    and French understandings of merit, talent, and intelligence over the
    past two centuries”
    http://www.amazon.com/The-Measure-Merit-Intelligence-Inequality/dp/0691017158
    The British have centuries of experience dealing with the “unruly” races. They found that if they mixed up to 10% of undisciplined students, the 90% brought up the 10%. Anything over 10% of undisciplined students and the whole group sank down. If a person does not learn discipline, they will not learn self-discipline. Without self-discipline, they won’t get anywhere in life.

    Society never goes very far if it doesn’t have morality. Morality is scarce without self-discipline.

    No amount of law can bring morality. Only self-discipline can do it. In an immoral society, the weak can only be protected by guards. In a moral society, the weak are protected by custom.

    Rape is a great barometer for how much self-discipline a society has.

    If a society requires that women can’t go out without covering from head to foot and being chaperoned,,,, how safe can that society be? In sub-Sahara Africa, a girl is more likely to be raped than the graduate from high school.

    • Bill Ross

      Makes you wonder what the running percentage of psychopaths in society is, decade by decade over the last century or so, as central control “educators” have been busily creating their “new socialist man” (statespeak), which in reality means “new antisocial man”.

      Have we hit the magic 10%, where the 90% gets swamped? Stay tuned…

      • Danny B

        Bill, I’m not so much talking about psychopaths. Look at the record for scholastic accomplishment for oriental and Asian kids. They wreck the grade curve. Look at the scholastic accomplishments of home-schooled kids. They dominate. The loser kids in class weren’t necessarily psychopaths. They had never been instilled with a strong appreciation of the necessity of a good basic education. Detroit has a 50% illiteracy rate. This is strictly the parents fault.

        I travelled around MENA by road. My conclusion was that parents brought up their boys without any sense of restraint.

  • MetaCynic

    The decades long migration from towns and cities to suburbs was to a large extent facilitated by the U.S. interstate highway system, a creature of industrial planning implemented at the national level. It’s certainly open to debate how much of this migration would have taken place in the absence of the highway boondoggle for the car and construction industries financed by taxes and central bank credit creation. Of course the social engineering experiment during the 1960’s known as forced public school busing provided a further impetus for middle class flight from cities to suburbs.

    As TDB pointed out, much of the artificial, car dependent nature of suburbs can be attributed to credit creation, taxes and corporate personhood. Yet, the suburbs’ monotonous architectural look and feel along with the ubiquitous sprawl is a product of zoning regulations concocted by local elected officials and not something imposed on suburban inhabitants by an alien power. In other words the generally politically conservative suburbanites’ own value system welcomed rigid, authoritarian land use controls thus segregating uses and activities which, for a richer social experience, were traditionally mingled in older urban neighborhoods. Instead of walkable, spontaneously evolved neighborhoods filled with visually stimulating and interesting mixes of architectural styles, details, color palettes and building materials and housing not only residential uses but shops and services as well, suburbanites insisted on prohibiting streets, buildings and landscaping not conforming to the central plan spelled out in the local zoning ordinance. They thus doomed themselves to having to drive to the nearest mailbox!

    Not only is it not enough for busybodies to impose uniform street widths, lot sizes, building heights, volumes and setbacks, the norm today is the spectacle of visual illiterates on appearance committees further pinching property rights by dictating roof pitches, window arrangements and material colors in the foolish belief that uniformity in bad taste protects property values. Anything in front yards other than mowed grass, tidy flower beds and kitschy lawn ornaments has been criminalized throughout most of suburban America’s residential districts.

    It’s beyond question that the most vibrant neighborhoods in American and European cities and older adjacent suburbs evolved through the play of shared values long before the leaden hand of government zoning arrived on the scene. This is where the educated, monied elite now live. There is now a growing awareness among urban planners that modern suburbs are a social and economic disaster. Yet not understanding that unplanned social and economic forces were largely responsible for the appeal of traditional towns and cities, the planners are now trying to command that look and feel into existence in suburbs by tinkering with zoning ordinances.

    It is their fear of the other, the different and the unfamiliar that has trapped suburbanites in a bland wasteland requiring car travel to get to anywhere at all. Through their rigid zoning ordinances they have willingly criminalized the efforts of entrepreneurs to restructure the unworkable suburban landscape without incurring the huge expense in time and money to seek permission from bureaucrats to do so.

  • Praetor

    Interesting, so the poor are out in the burbs, (I wondered where they went), and now Obama can give them a car, so they (poor) can drive back to where they use to live, to see the old homestead, that old 90, 80, 70, 60 year old house now being rebuilt by some crazy looking yuppie kid who bought it for pennies on the dollar and making it in to his dream home, its called (GENTRIFICATION). The problem with the poor, they have no gumption nor ambition to improve their lives, not to worry, Obama will take care of you. Ask him, he will tell you, I’m here with “Hope and Change”, look you no longer are living in that broke down neighbor-Hood, you are liven the dream. Stupid Americans!!!

  • synthetic_society

    Maybe this is the reason for the push for driverless cars. The future of public transport to address suburban poverty!

    I was prognosticating back in the 90s about suburbs being the future ghettos. Seemed pretty obvious that you couldn’t have all that infrastructure when it wasn’t actually producing something.

    I’ve often wondered if one of the intended consequences of the housing bubble was to aid gentrification. Even if it wasn’t, it sure was an effective way of swapping. What you can’t accomplish politically can always be accomplished voluntarily through finance.

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